Unlike any other investment, when you invest in art you get the benefits of a beautiful piece to hang on your wall as well as the promise of plentiful profits when you do finally sell. We spoke to Julian Usher, Head of Sales of London’s Red Eight Gallery, to discover how he fell in love with the art world and how he’s helping investors enter this thriving market.
Julian, you’ve worked in the art world for a number of years. What drew you to the sector?
I started out in the City as an FX Broker and went on to trade oil in one of the last open outcry pits before computer automation in the late 90s. I then retrained in Executive Search and worked for some of the largest financial institutions before founding Gibson Rose Search & Selection which I ran successfully for 14 years.
Moving into the art world was a breath of fresh air as it’s all about building and developing personal connections. I have always had a love of art, and it was almost serendipitous when an opportunity became available with one of Mayfair’s largest galleries just when I was ready for my next move.
After a few years I was invited to work with Red Eight Gallery which at the time was an ambitious young startup disrupting the art world. As well as being able to fulfill our investors financial goals, working at Red Eight Gallery also allows me to help collectors find artwork they absolutely love. That’s hands down the best part of my job.
What excites you about the art market as an investor?
To put it bluntly, if this were any other industry it wouldn’t be sustainable. Every single artist has a market within the art world. If we look at Banksy for argument’s sake, if his artwork was any other commodity it wouldn’t be sustainable to keep rising in price so dramatically every single time there’s a new auction. If this was any other type of commodity, there would have been a crash by now.
Why do you think it should be on investors’ radars in 2021?
Firstly, with the prospect of ongoing volatility due to the COVID-19 pandemic, art investment is a fantastic method of capital protection. It is an asset class that is not correlated to everything else that is going on in the world. The art market is not correlated to the rise and fall of stocks and shares, it’s not correlated to what the banks are showing, and it’s not correlated to the current pandemic. The reason for this is that art is so subjective. There is always someone who is going to buy your artwork for more than the price you paid for it.
Additionally, investors who enter the art market can enjoy market-beating returns. In 2020 at Red Eight Gallery we showed our investors average returns of 24%, beating
the returns on gold, classic cars, wine, watches, and so on. Having said that, we also have many collectors who come to us looking to acquire beautiful art works to display in their homes or offices which is another unique benefit that you don’t get with any other asset types.
Does art investment tend to be a longer-term strategy? How quickly can investors profitably exit the market?
At Red Eight Gallery we have structured the company to be able to exit investors sooner than most. We have several different exit routes, but typically the longer you hold onto your artwork the higher return you can expect. We always advise our clients on when is the best moment to enter and exit the market by constantly monitoring the landscape of the art world. We also make sure that our clients are investing in the right profile of artist, whether that be emerging artists, well-established or blue chip artists, in alignment with their investment goals.
What makes Red Eight Gallery different from other art investment companies out there?
As a young company coming into an established market, we were aware from the beginning that we needed to do things differently. One service that I know no other gallery in the world offers is our corporate leasing sector. This means we’re the only gallery that can treat our artworks like a buy-to-let property. Investors can enjoy the benefits of a capital growth product, their artwork, showing a regular income.
For example, this asset could generate a 5% guaranteed net return per annum by leasing the artwork out to one of our corporate clients such as serviced office spaces, high-end restaurants and top hotels. As well as generating this annual returns, artwork that is leased also continues to grow in value year on year until you decide to liquidate your portfolio. Thanks to this unique corporate leasing model, Red Eight is able to provide investors with two streams of returns, one of which can be accessed while still retaining full ownership of the asset.
As well as multiple income and exit strategies, another key element to look for when deciding on which gallery to invest with is their ability to source artwork at below market value wherever possible. Here at Red Eight we have the insider connections and expertise to ensure our investors get the very best prices every time.
How is the art market performing right now given the twin headwinds of Brexit and the Covid-19 pandemic?
Paradoxically, the Covid-19 pandemic has been beneficial for the art market since it’s encouraged new investors to look elsewhere. In terms of the artwork that is available, there has also been a flourishing over the lockdown period when a lot of artists were doing nothing but sitting at home and creating.
This has been especially exciting for emerging artists with many having the time to take their careers a bit more seriously. The emerging talent that is coming through at the moment is seriously impressive. Overall, it’s a vibrant and buoyant market right now and it is a great time to start investing in art. In terms of Brexit I don’t see it significantly affecting the art market since there is no correlation to other markets and the value of art work tends to be heavily subjective. In terms of everything that is going on in the world right now, everyone that owns a piece of artwork can rest assured that their money is safe.
For more information on investing in art, please visit www.redeightgallery.com.